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Vanderbilt Law Review

First Page

238

Abstract

In the landmark decision, Greenman v. Yuba Power Products,Inc., , the California Supreme Court eliminated a similar barrier to consideration of products liability goals-the breach of warranty theory designed to meet the needs of commercial transactions. Justice Traynor addressed the central question-"When should the manufacturer be responsible to those injured by his products?"'-and concluded that "rules . . .that were developed to meet the needs of commercial transactions cannot properly be invoked to govern the manufacturer's liability to those injured by their defective products unless those rules also serve the purposes for which such liability is imposed."' Confronted with another central issue--Who may be held liable as a defendant to a products liability suit? --several federal courts and most recently two state courts have critically reexamined the corporate law rule that had been used to determine, within a limited context, who could be subject to liability and who could not. Finding that the corporate law rule is not always consistent with the purposes for which strict liability is imposed, several federal courts have found ways to avoid the undesirable result of the corporate law analysis by broadening existing exceptions to the majority rule of transferee nonliability. Two recent state court cases, Turner v. Bituminous Casualty Co. and Ray v. Alad Corp., have followed the federal courts by criticizing the corporate law creditor liability approach. These cases hold that a products liability suit for damages caused by the products of the transferor corporation may be maintained against a transferee corporation that purchased for cash all the assets of the transferor. This discussion will examine the Turner and Ray decisions, focusing on the different rationales used by each court to arrive at a common holding of transferee liability.

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